Commerzbank highlights contagion risk in China's banking sector

Comments from Xuanlai He, credit analyst at Commerzbank in Singapore

• Banks are increasingly using trusts or asset management plans to lend
• Recording them as funds to be received rather than as loans, which are subject to stricter regulatory oversight and capital limits
• Commerzbank AG estimates may result in losses of as much as 1 trillion yuan ($153 billion) over five years
• "Chinese banks haven't provisioned for receivables and those are essentially riskier loans"
• "The eventual losses will have significant impact on China's economy because you could have contagion risk in banking sector'

via Bloomberg